```markdown [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) BioAtla, Inc.'s unaudited condensed consolidated financial statements for Q3 2021 and FY2020, including balance sheets, operations, equity, cash flows, and accounting notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2021 (unaudited) | December 31, 2020 | | :--------------------------------- | :----------------------------- | :------------------ | | **Assets** | | | | Cash and cash equivalents | $269,925 | $238,605 | | Total current assets | $273,517 | $240,681 | | Total assets | $277,579 | $244,937 | | **Liabilities** | | | | Accounts payable and accrued expenses | $24,939 | $12,068 | | Current portion of deferred revenue | $19,806 | $19,806 | | Total current liabilities | $45,227 | $32,261 | | Total liabilities | $46,926 | $34,963 | | **Stockholders' Equity** | | | | Additional paid-in capital | $393,578 | $300,888 | | Accumulated deficit | $(162,929) | $(90,917) | | Total stockholders' equity | $230,653 | $209,974 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Collaboration and other revenue | $— | $150 | $250 | $429 | | Research and development expense | $16,553 | $4,864 | $41,826 | $9,448 | | General and administrative expense | $7,142 | $3,301 | $31,376 | $4,625 | | Total operating expenses | $23,695 | $8,165 | $73,202 | $14,073 | | Loss from operations | $(23,695) | $(8,015) | $(72,952) | $(13,644) | | Total other income (expense) | $765 | $(3,617) | $940 | $(5,814) | | Consolidated net loss and comprehensive loss | $(22,930) | $(11,632) | $(72,012) | $(19,458) | | Net loss per common share, basic and diluted | $(0.68) | $(0.13) | $(2.13) | $(0.13) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity increased from **$209,974 thousand** at **December 31, 2020**, to **$230,653 thousand** at **September 30, 2021**, primarily driven by additional paid-in capital from stock issuances and stock-based compensation, partially offset by net losses[13](index=13&type=chunk) Key Changes in Stockholders' Equity (Nine Months Ended September 30, 2021, in thousands) | Item | Amount | | :------------------------------------------ | :------- | | Balance at December 31, 2020 | $209,974 | | Stock-based compensation expense | $21,307 | | Issuance of common stock, net of issuance costs | $71,053 | | Net loss | $(72,012)| | Balance at September 30, 2021 | $230,653 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :------------------------- | :---------- | :---------- | | Operating activities | $(41,265) | $(22,328) | | Investing activities | $(835) | $(195) | | Financing activities | $73,420 | $75,576 | | Net increase in cash and cash equivalents | $31,320 | $53,053 | | Cash and cash equivalents, end of period | $269,925 | $56,757 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Summary of Significant Accounting Policies](index=7&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) - BioAtla, Inc. converted from BioAtla, LLC in July 2020 as part of a Corporate Reorganization, spinning off Himalaya Therapeutics SEZC and completing a Series D financing; post-reorganization, BioAtla, Inc. is a single legal entity[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - The Company has incurred cumulative operating losses and negative cash flows, with an accumulated deficit of **$162.9 million** as of September 30, 2021; management believes current cash and cash equivalents are sufficient to fund operations for at least one year[20](index=20&type=chunk)[22](index=22&type=chunk) - The Company expects to lose its Emerging Growth Company (EGC) status by **December 31, 2021**, making new accounting standards effective for its fiscal year beginning **January 1, 2021**[32](index=32&type=chunk)[33](index=33&type=chunk) [2. Balance Sheet Details](index=10&type=section&id=2.%20Balance%20Sheet%20Details) Prepaid Expenses and Other Current Assets (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :---------------------------------- | :----------------- | :------------------ | | Prepaid research and development | $2,549 | $2,004 | | Prepaid insurance | $691 | $— | | Other prepaid expenses and current assets | $352 | $72 | | Total | $3,592 | $2,076 | Property and Equipment, Net (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :----------------------------------- | :----------------- | :------------------ | | Total gross property and equipment | $7,851 | $7,172 | | Less accumulated depreciation and amortization | $(3,943) | $(3,070) | | Total | $3,908 | $4,102 | Accounts Payable and Accrued Expenses (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :----------------------------------- | :----------------- | :------------------ | | Accounts payable | $1,550 | $2,456 | | Accrued compensation | $3,008 | $2,804 | | Accrued research and development | $15,883 | $4,852 | | Accrued equity issuance costs | $3,947 | $1,143 | | Other accrued expenses | $551 | $813 | | Total | $24,939 | $12,068 | [3. Fair Value Measurements](index=10&type=section&id=3.%20Fair%20Value%20Measurements) - The Company's current financial assets and liabilities have fair values representative of their carrying amounts due to their short-term nature; no financial assets or liabilities were measured at fair value on a recurring basis as of **September 30, 2021**, and **December 31, 2020**[38](index=38&type=chunk) [4. Convertible and Other Debt](index=10&type=section&id=4.%20Convertible%20and%20Other%20Debt) - The Company's **$0.7 million** Paycheck Protection Program (PPP) loan, borrowed in **April 2020**, was fully forgiven in **July 2021**, resulting in recognition of other income[42](index=42&type=chunk)[43](index=43&type=chunk) Interest Expense on Debt (in thousands) | Period | 2021 | 2020 | | :--------------------------------- | :--- | :--- | | Three months ended September 30 | $0 | $86 | | Nine months ended September 30 | $3 | $1,387 | [5. Commitments and Contingencies](index=12&type=section&id=5.%20Commitments%20and%20Contingencies) Expected Future Minimum Operating Lease Payments (in thousands) | Years ending December 31 | Operating Lease | | :------------------------- | :-------------- | | 2021 (3 months) | $370 | | 2022 | $1,555 | | 2023 | $1,636 | | 2024 | $1,685 | | Thereafter | $845 | - The Company is not currently a party to any legal proceedings expected to have a material adverse effect on its business, operating results, or financial condition[46](index=46&type=chunk) [6. Stockholders'/Members' Equity (Deficit)](index=13&type=section&id=6.%20Stockholders'%2FMembers'%20Equity%20%28Deficit%29) - In **December 2020**, the Company completed its IPO, selling **12,075,000 shares** of common stock at **$18.00 per share**, generating **$198.3 million** net proceeds; all outstanding convertible preferred stock converted into common and Class B common stock[52](index=52&type=chunk) - In **September 2021**, the Company completed a Private Placement, selling **2,678,600 shares** of common stock at **$28.00 per share**, raising **$71.0 million** net proceeds[53](index=53&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :------------------------- | :------------------------------ | :----------------------------- | | Research and development | $1,267 | $3,376 | | General and administrative | $3,099 | $17,931 | | Total | $4,366 | $21,307 | - As of **September 30, 2021**, total unrecognized stock-based compensation expense for RSUs was **$19.9 million** (expected over **~2.4 years**) and for stock options was **$14.3 million** (expected over **~3.2 years**)[60](index=60&type=chunk)[62](index=62&type=chunk) Common Stock Reserved for Future Issuance (common equivalent shares) | Item | September 30, 2021 | December 31, 2020 | | :--------------------------------------------------- | :----------------- | :------------------ | | Warrants for the purchase of common stock | 717,674 | 717,674 | | Common stock options and restricted stock units issued and outstanding | 2,553,198 | 2,535,143 | | Awards available for future issuance under the 2020 Plan | 3,338,354 | 2,404,535 | | Awards available for future issuance under the ESPP | 828,713 | 464,829 | | Total common stock reserved for future issuance | 7,437,939 | 6,122,181 | [7. Profits Interest Incentive Plan](index=17&type=section&id=7.%20Profits%20Interest%20Incentive%20Plan) - Prior to the **July 2020** Corporate Reorganization, the Company maintained a Profits Interest Incentive Plan, with Class B units treated as liability awards measured at fair value; this plan was assumed by an affiliate during the reorganization[72](index=72&type=chunk)[73](index=73&type=chunk) Allocation of Equity-Based Compensation for Class B Units (in thousands) | Expense Category | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2020 | | :------------------------- | :------------------------------ | :----------------------------- | | Research and development | $5 | $(3,355) | | General and administrative | $(29) | $(4,270) | | Total | $(24) | $(7,625) | [8. Collaboration, License and Option Agreements](index=18&type=section&id=8.%20Collaboration%2C%20License%20and%20Option%20Agreements) - The Company has a Global Co-Development and Collaboration Agreement with BeiGene for the CAB-CTLA-4 antibody (BA3071); BeiGene is responsible for global development, manufacturing, and commercialization costs, with BioAtla eligible for tiered royalties and up to **$225.5 million** in milestone payments[76](index=76&type=chunk)[77](index=77&type=chunk)[82](index=82&type=chunk) - As of **September 30, 2021**, and **December 31, 2020**, the Company had **$19.8 million** in deferred revenue related to the BeiGene collaboration, expected to be earned upon transfer of know-how and master cell bank within the next twelve months[84](index=84&type=chunk) Collaboration Revenue (in thousands) | Period | 2021 | 2020 | | :--------------------------------- | :--- | :--- | | Three months ended September 30 | $0 | $150 | | Nine months ended September 30 | $250 | $429 | [9. Related Party Transactions](index=19&type=section&id=9.%20Related%20Party%20Transactions) - In **March 2021**, a Transition Agreement with co-founder Carolyn Anderson Short resulted in a lump sum payment, pro-rated bonus, and accelerated full vesting of **7,747** stock options and **138,461** restricted stock units, leading to a **$7.0 million** incremental fair value recognized[89](index=89&type=chunk) - As part of the **September 2021** Private Placement, the Company issued **625,000 shares** of common stock to certain related party stockholders for **$17.5 million**[90](index=90&type=chunk) [10. 401(k) Plan](index=20&type=section&id=10.%20401%28k%29%20Plan) - The Company maintains a 401(k) plan for eligible employees but had not made any matching contributions as of **September 30, 2021**, and **December 31, 2020**[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses BioAtla, Inc.'s financial condition and operational results, highlighting its clinical-stage status, significant losses, funding reliance, and cash flow activities [Overview](index=21&type=section&id=Overview) - BioAtla is a **phase 2 clinical-stage** biopharmaceutical company developing conditionally active biologics (CABs) for solid tumor cancer, designed to be active only in the acidic tumor microenvironment[93](index=93&type=chunk) - The Company has incurred significant losses, with net losses of **$22.9 million** and **$72.0 million** for the three and nine months ended **September 30, 2021**, respectively, and an accumulated deficit of **$162.9 million**[96](index=96&type=chunk) - Current cash and cash equivalents of **$269.9 million** are expected to fund operations into the **first half of 2024**, but substantial additional capital will be required for product development and commercialization[101](index=101&type=chunk) [Impact of COVID-19 on Our Business](index=22&type=section&id=Impact%20of%20COVID-19%20on%20Our%20Business) - The COVID-19 pandemic has caused non-material business disruptions, with the **Phase 2 sarcoma trial** remaining on schedule and modest delays in patient initiations for AXL NSCLC and ROR2 studies, but overall timelines for study completion are unchanged[102](index=102&type=chunk) - The Company's **$0.7 million** PPP loan was fully forgiven in **July 2021**, recognized as other income[102](index=102&type=chunk)[103](index=103&type=chunk) [Financial Operations Overview](index=23&type=section&id=Financial%20Operations%20Overview) - The Company has not generated revenue from product sales and does not expect to in the near future; collaboration revenue for the nine months ended **September 30, 2021**, was **$0.3 million** from legacy service contracts[104](index=104&type=chunk)[106](index=106&type=chunk) - Research and development expenses are expected to increase substantially as the Company advances clinical programs and expands its pipeline[108](index=108&type=chunk) - General and administrative expenses are expected to increase due to operating as a public company, including compliance, legal, and intellectual property costs[110](index=110&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Key Financial Changes (Three Months Ended September 30, 2021 vs. 2020, in thousands) | Metric | 2021 | 2020 | Change | | :--------------------------------- | :---------- | :---------- | :---------- | | Collaboration revenue | $— | $150 | $(150) | | Research and development | $16,553 | $4,864 | $11,689 | | General and administrative | $7,142 | $3,301 | $3,841 | | Loss from operations | $(23,695) | $(8,015) | $(15,680) | | Consolidated net loss | $(22,930) | $(11,632) | $(11,298) | Key Financial Changes (Nine Months Ended September 30, 2021 vs. 2020, in thousands) | Metric | 2021 | 2020 | Change | | :--------------------------------- | :---------- | :---------- | :---------- | | Collaboration revenue | $250 | $429 | $(179) | | Research and development | $41,826 | $9,448 | $32,378 | | General and administrative | $31,376 | $4,625 | $26,751 | | Loss from operations | $(72,952) | $(13,644) | $(59,308) | | Consolidated net loss | $(72,012) | $(19,458) | $(52,554) | - Research and development expenses increased significantly due to manufacturing and clinical development for **BA3011** and **BA3021**, preclinical development for bispecific programs, and increased stock-based compensation[118](index=118&type=chunk)[128](index=128&type=chunk) - General and administrative expenses rose primarily due to increased stock-based compensation, insurance, and personnel-related costs, including severance benefits[119](index=119&type=chunk)[129](index=129&type=chunk) - Interest expense decreased due to the settlement of convertible debt in **July 2020** and the forgiveness of the PPP loan in **July 2021**[122](index=122&type=chunk)[131](index=131&type=chunk) - A **$0.7 million** gain on extinguishment of debt was recognized in **Q3 2021** due to PPP loan forgiveness, contrasting with a **$2.7 million** loss in **Q3 2020** from convertible promissory note settlement[124](index=124&type=chunk)[133](index=133&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - As of **September 30, 2021**, the Company had **$269.9 million** in cash and cash equivalents, expected to fund operations into the **first half of 2024**[135](index=135&type=chunk)[139](index=139&type=chunk) - The Company will require substantial additional funding for product development and commercialization, potentially through equity offerings, debt financings, or collaborations[139](index=139&type=chunk)[140](index=140&type=chunk) Cash Flow Summary (Nine Months Ended September 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :------------------------- | :---------- | :---------- | | Operating activities | $(41,265) | $(22,328) | | Investing activities | $(835) | $(195) | | Financing activities | $73,420 | $75,576 | | Net increase in cash and cash equivalents | $31,320 | $53,053 | - Net cash used in operating activities increased to **$41.3 million** in **2021** from **$22.3 million** in **2020**, driven by higher net loss and changes in operating assets and liabilities[142](index=142&type=chunk)[143](index=143&type=chunk) - Net cash provided by financing activities was **$73.4 million** in **2021**, primarily from a **$75.0 million** private placement of common stock, offset by IPO costs[145](index=145&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The Company's financial statements rely on estimates and assumptions, particularly for revenue recognition, R&D accruals, equity-based compensation, and fair value measurements; no material changes to critical accounting policies were reported during the nine months ended **September 30, 2021**[146](index=146&type=chunk)[147](index=147&type=chunk) [Off-Balance Sheet Arrangements](index=32&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company has not entered into any off-balance sheet arrangements[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Quantitative and qualitative disclosures about market risk are not applicable to BioAtla, Inc. as a smaller reporting company - Quantitative and qualitative disclosures about market risk are not applicable to BioAtla, Inc. as a smaller reporting company[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the Company's disclosure controls and procedures as effective as of September 30, 2021, with no material changes in internal control over financial reporting - As of **September 30, 2021**, the Company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level[149](index=149&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended **September 30, 2021**[151](index=151&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The Company is not currently a party to any legal proceedings that, if determined adversely, would individually or in aggregate have a material adverse effect on its business, operating results, or financial condition[152](index=152&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Outlines significant risks of investing in BioAtla, Inc., covering financial position, product development, regulatory approvals, operational challenges, and intellectual property [Risk Factor Summary](index=33&type=section&id=Risk%20Factor%20Summary) - Key risks include the Company's limited operating history, significant losses, need for substantial additional capital, potential product development failures or delays, and dependence on its patented CAB technology platform[153](index=153&type=chunk)[154](index=154&type=chunk) - Other risks involve market acceptance of novel therapeutic modalities, unpredictability of clinical trial results, competition from other cancer treatments, and challenges in obtaining and maintaining regulatory approvals[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) [Risks related to our financial position and need for additional capital](index=34&type=section&id=Risks%20related%20to%20our%20financial%20position%20and%20need%20for%20additional%20capital) - BioAtla is a clinical-stage biopharmaceutical company with no approved products and a history of significant losses, including **$72.0 million** for the nine months ended **September 30, 2021**, and an accumulated deficit of **$162.9 million**[162](index=162&type=chunk)[163](index=163&type=chunk) - The Company will require substantial additional capital beyond its current **$269.9 million** cash and cash equivalents to fund operations into the **first half of 2024**, with future funding dependent on development progress and market conditions[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) [Risks related to the discovery, development and commercialization of our product candidates](index=36&type=section&id=Risks%20related%20to%20the%20discovery%2C%20development%20and%20commercialization%20of%20our%20product%20candidates) - Product candidates, including **BA3011** and **BA3021** in **Phase 2 trials**, may fail or be delayed in development due to issues like negative preclinical/clinical results, regulatory hurdles, patient recruitment challenges, or manufacturing problems[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - The Company's future success is heavily dependent on its patented CAB technology platform; any setbacks could detrimentally impact all product candidates[174](index=174&type=chunk)[175](index=175&type=chunk) - Undesirable side effects, such as reversible myelosuppression and transient liver enzyme elevations observed in **BA3011** and **BA3021** trials, could halt clinical development or delay regulatory approval[196](index=196&type=chunk)[197](index=197&type=chunk) - Competition from other biopharmaceutical companies developing novel treatments for cancer, including immune-based cellular therapies and ADCs, poses a significant risk to the commercial viability of BioAtla's product candidates[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Risks related to regulatory approval and other legal compliance matters](index=42&type=section&id=Risks%20related%20to%20regulatory%20approval%20and%20other%20legal%20compliance%20matters) - Obtaining U.S. or foreign regulatory approval is costly, lengthy, and uncertain, with no guarantee that any product candidates will receive approval[222](index=222&type=chunk)[223](index=223&type=chunk) - The Company intends to seek accelerated approval pathways for **BA3011** and **BA3021**, but success is not guaranteed, and confirmatory studies may be required post-approval[229](index=229&type=chunk)[230](index=230&type=chunk) - Post-approval, products are subject to ongoing regulatory obligations, including potential labeling restrictions, post-marketing studies, and market withdrawal, with non-compliance leading to significant penalties[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - Healthcare legislative reforms, such as the **ACA** and drug pricing scrutiny, could adversely impact the Company's business by affecting reimbursement policies and market access[254](index=254&type=chunk)[255](index=255&type=chunk)[258](index=258&type=chunk) [Risks related to employee matters, managing our growth and other risks related to our business](index=57&type=section&id=Risks%20related%20to%20employee%20matters%2C%20managing%20our%20growth%20and%20other%20risks%20related%20to%20our%20business) - The Company's success depends on attracting and retaining qualified senior management and scientific personnel, with intense competition in the biopharmaceutical field[278](index=278&type=chunk)[279](index=279&type=chunk) - Failure to establish effective sales, marketing, and distribution capabilities, either internally or through third parties, could hinder commercialization efforts and future product revenue[280](index=280&type=chunk)[281](index=281&type=chunk) - Growth management challenges include recruiting and integrating employees, managing internal development, and improving operational controls, especially with reliance on numerous external consultants[282](index=282&type=chunk)[284](index=284&type=chunk) - Cybersecurity attacks or data breaches could disrupt operations, lead to significant liabilities, and harm the Company's reputation[285](index=285&type=chunk)[286](index=286&type=chunk) - Operations in China through BioDuro expose the Company to risks from changes in Chinese laws, political unrest, and economic instability, potentially affecting research and development activities[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Concentration of operations in San Diego, California, and reliance on BioDuro in China exposes the Company to risks from natural disasters, potentially disrupting business continuity[291](index=291&type=chunk)[292](index=292&type=chunk) - The COVID-19 pandemic continues to pose risks to preclinical and clinical trial operations, potentially delaying patient enrollment, data readouts, and regulatory filings[295](index=295&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk) [Risks related to our dependence on third parties](index=62&type=section&id=Risks%20related%20to%20our%20dependence%20on%20third%20parties) - Reliance on third-party collaborators, like BeiGene for **BA3071**, means limited control over resource allocation and potential for delays or termination of development programs[299](index=299&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - Failure of third-party CROs to perform contractually, meet regulatory requirements, or adhere to deadlines could delay development programs[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - Dependence on third-party contract manufacturers for product candidates increases the risk of insufficient supply, quality issues, or delays, potentially impacting clinical trials and commercialization[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) - Manufacturing biotechnology products is complex; difficulties in production, contamination, or raw material shortages could delay or stop development and commercialization[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) [Risks related to intellectual property](index=68&type=section&id=Risks%20related%20to%20intellectual%20property) - The Company's success depends on obtaining, maintaining, and protecting patents and other IP rights for its product candidates and technologies, which is an expensive and time-consuming process[321](index=321&type=chunk)[322](index=322&type=chunk) - Patents may not be sufficiently broad, could be challenged, or found invalid/unenforceable, and competitors may design around them[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk) - Failure to protect trade secrets and confidential know-how could harm the Company's competitive position, as enforcement is difficult and costly[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - The limited lifespan of patents (generally **20 years**) means protection for product candidates might expire before or shortly after commercialization, leading to increased competition[333](index=333&type=chunk) - Changes in U.S. patent law (e.g., Leahy-Smith Act) and interpretations could increase uncertainties and costs in patent prosecution and enforcement[335](index=335&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) - Third-party intellectual property rights could prevent or delay drug discovery and commercialization, potentially requiring costly litigation or licenses on unfavorable terms[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - Failure to comply with obligations under license or collaboration agreements could lead to damages or loss of essential intellectual property rights[362](index=362&type=chunk)[363](index=363&type=chunk) - Protecting intellectual property rights globally is challenging due to varying laws and enforcement difficulties in certain countries, potentially diminishing the value of these rights[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) [Risks related to our common stock](index=79&type=section&id=Risks%20related%20to%20our%20common%20stock) - The Company's operating results are subject to significant fluctuations, and failure to meet investor or analyst expectations could cause stock price volatility[371](index=371&type=chunk)[372](index=372&type=chunk) - Future issuances of equity or convertible debt will dilute existing shareholders' ownership and may adversely affect the stock price[375](index=375&type=chunk) - The dual-class common stock structure (voting common, non-voting Class B convertible) may limit common stockholders' influence on corporate matters[376](index=376&type=chunk)[377](index=377&type=chunk) - Principal stockholders and management own a significant percentage (**46.8%** as of **Sep 30, 2021**) of outstanding common stock, allowing them to exert significant control over corporate actions[380](index=380&type=chunk)[381](index=381&type=chunk) - The Company will cease to be an 'emerging growth company' and 'smaller reporting company' as of **December 31, 2021**, leading to increased compliance costs and disclosure requirements[384](index=384&type=chunk)[385](index=385&type=chunk)[387](index=387&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could make acquisitions more difficult and prevent changes in management[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales were reported; **$3.4 million** of **$198.3 million** IPO net proceeds used by September 30, 2021, with no material change in planned use - No unregistered sales of equity securities were reported[402](index=402&type=chunk) - As of **September 30, 2021**, **$3.4 million** of the **$198.3 million** net proceeds from the **December 2020 IPO** had been used, consistent with the planned use of proceeds[402](index=402&type=chunk)[403](index=403&type=chunk) [Item 3. Defaults Upon Senior Securities](index=86&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities - No defaults upon senior securities were reported[404](index=404&type=chunk) [Item 4. Mine Safety Disclosures](index=86&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[404](index=404&type=chunk) [Item 5. Other Information](index=86&type=section&id=Item%205.%20Other%20Information) The Company reported no other information - No other information was reported[404](index=404&type=chunk) [Item 6. Exhibits](index=87&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL financial data - Exhibits include the Form of Stock Purchase Agreement, Non-Employee Director Stock Option Agreement, Employee Stock Option Agreement, CEO and CFO certifications (**302** and **906**), and Inline XBRL financial data[405](index=405&type=chunk)[406](index=406&type=chunk) ```

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) BioAtla, Inc. reported a **$18.7 million** net loss for Q1 2021, significantly up from **$1.6 million** in Q1 2020, due to increased R&D and G&A expenses, with cash and equivalents at **$221.2 million** [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets decreased to **$229.1 million** from **$244.9 million** at year-end 2020, mainly due to reduced cash, with total liabilities at **$33.2 million** and equity at **$195.9 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $221,199 | $238,605 | | Total current assets | $224,582 | $240,681 | | **Total assets** | **$229,087** | **$244,937** | | **Liabilities & Equity** | | | | Total current liabilities | $30,530 | $32,261 | | **Total liabilities** | **$33,171** | **$34,963** | | **Total stockholders' equity** | **$195,916** | **$209,974** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2021, the company reported no collaboration revenue and a **$18.7 million** net loss, or **$0.56 per share**, significantly higher than the **$1.6 million** loss in Q1 2020, driven by increased operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Collaboration revenue | $0 | $89 | | Research and development expense | $10,423 | $1,661 | | General and administrative expense | $8,374 | $(463) | | **Loss from operations** | **$(18,797)** | **$(1,109)** | | **Consolidated net loss** | **$(18,701)** | **$(1,604)** | | Net loss per common share | $(0.56) | N/A | [Condensed Consolidated Statement of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity) Total stockholders' equity decreased from **$210.0 million** at December 31, 2020, to **$195.9 million** at March 31, 2021, primarily due to a **$18.7 million** net loss, partially offset by **$4.6 million** in stock-based compensation - The net loss of **$18.7 million** was the primary driver for the reduction in stockholders' equity during the first quarter of **2021**[14](index=14&type=chunk) - Stock-based compensation added **$4.6 million** to additional paid-in capital, partially offsetting the impact of the net loss[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for Q1 2021 increased to **$15.0 million** from **$3.8 million** in Q1 2020, resulting in a **$17.4 million** net decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,994) | $(3,814) | | Net cash used in investing activities | $(501) | $(20) | | Net cash (used in) provided by financing activities | $(1,911) | $500 | | **Net decrease in cash and cash equivalents** | **$(17,406)** | **$(3,334)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail clinical development of CABs, confirm sufficient cash for at least one year, and disclose **$19.8 million** in deferred BeiGene collaboration revenue and a **$1.0 million** non-cash charge from a transition agreement - The company is in clinical development of its two lead **CAB antibody drug conjugates (CAB ADC)** targeting AXL and ROR2 receptors[19](index=19&type=chunk) - Management concluded there is **not substantial doubt** about the Company's ability to continue as a going concern, with cash **sufficient to fund operations** for at least one year from the financial statement issuance date[23](index=23&type=chunk) - As of March 31, **2021**, the company had **$19.8 million** in deferred revenue from its BeiGene collaboration, expected to be recognized upon transfer of know-how and master cell bank within the next twelve months[76](index=76&type=chunk) - A **Transition Agreement** with co-founder Carolyn Anderson Short resulted in accelerated vesting of equity awards, leading to an incremental fair value of **$7.0 million** to be recognized over the transition period, with a **$1.0 million** non-cash charge recognized in Q1 **2021**[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The clinical-stage biopharmaceutical company incurred a **$18.7 million** net loss for Q1 2021, with **$221.2 million** cash from its December 2020 IPO, expected to fund operations through 2022, despite increasing R&D and G&A expenses - The company is a clinical-stage biopharmaceutical company developing novel **Conditionally Active Biologics (CABs)** designed to selectively bind to targets in the acidic tumor microenvironment, aiming to reduce on-target, off-tumor toxicity[83](index=83&type=chunk) - Net loss for Q1 **2021** was **$18.7 million**, and the **accumulated deficit reached $109.6 million** as of March 31, **2021**. Losses are expected to continue due to ongoing R&D for product candidates like BA3011 and BA3021[86](index=86&type=chunk) - Following its December **2020** IPO, the company had cash and cash equivalents of **$221.2 million** as of March 31, **2021**, which is expected to fund operations at least through the end of **2022**[91](index=91&type=chunk)[117](index=117&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Collaboration revenue decreased to zero in Q1 2021, while R&D expenses surged by **$8.8 million** to **$10.4 million** and G&A expenses increased by **$8.9 million** to **$8.4 million**, widening the net loss to **$18.7 million** Comparison of Operations (in thousands) | Metric | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $89 | $(89) | | Research and development | $10,423 | $1,661 | $8,762 | | General and administrative | $8,374 | $(463) | $8,837 | | **Loss from operations** | **$(18,797)** | **$(1,109)** | **$(17,688)** | | **Consolidated net loss** | **$(18,701)** | **$(1,604)** | **$(17,097)** | Research and Development Expense Breakdown (in thousands) | Category | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | BA3011 (AXL-ADC) | $4,573 | $879 | $3,694 | | BA3021 (ROR2-ADC) | $1,328 | $924 | $404 | | Other CAB Programs | $1,720 | $632 | $1,088 | | Personnel and related | $1,233 | $1,150 | $83 | | Equity-based compensation | $954 | $(2,523) | $3,477 | | **Total R&D Expenses** | **$10,423** | **$1,661** | **$8,762** | - The **$8.9 million** increase in G&A expenses was primarily driven by a **$3.7 million** increase in stock-based compensation, a **$3.2 million** increase related to **2020** fair value adjustments to the former profits interest plan, and increased insurance and professional fees[109](index=109&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2021, the company held **$221.2 million** in cash, deemed sufficient to fund operations through 2022, despite **$15.0 million** net cash used in operating activities for Q1 2021 - As of March 31, **2021**, the company had cash and cash equivalents of **$221.2 million** and believes its current capital is **sufficient to fund operations** at least through the end of **2022**[112](index=112&type=chunk)[117](index=117&type=chunk) - In April **2020**, the company received a **$0.7 million** loan under the **Paycheck Protection Program (PPP)** of the **CARES Act**, which matures in April **2022** and bears a **1%** interest rate[114](index=114&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in Operating activities | $(14,994) | $(3,814) | | Net cash used in Investing activities | $(501) | $(20) | | Net cash (used in) provided by Financing activities | $(1,911) | $500 | [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a **smaller reporting company** - The company is a **smaller reporting company** and is therefore not required to provide these disclosures[127](index=127&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, **2021**, the company's **disclosure controls and procedures were effective** at the reasonable assurance level[128](index=128&type=chunk) - **No changes occurred** during the quarter ended March 31, **2021**, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[129](index=129&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a **material adverse effect** on its business or financial condition - The company reports that it is **not currently involved in any material legal proceedings**[130](index=130&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces extensive risks as a clinical-stage entity with a history of losses, requiring additional capital, and dependent on its CAB technology, regulatory approvals, and third-party reliance, with operational risks in China and from COVID-19 - The company is a clinical-stage entity with a **history of significant losses** and expects to continue incurring losses, making its **future viability difficult to assess**[133](index=133&type=chunk)[134](index=134&type=chunk) - **Substantial additional capital is required** to finance operations; **failure to raise capital could force delays or elimination** of research and development programs[136](index=136&type=chunk) - The company is **substantially dependent on the success** of its patented **Conditionally Active Biologics (CAB)** technology platform[143](index=143&type=chunk) - A portion of research and development occurs in China, **exposing the company to risks** from Chinese legal interpretation, trade wars, or political unrest[238](index=238&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales occurred; **$217.4 million** gross IPO proceeds from December 2020 remain unused as of March 31, 2021, with no change in planned use - The company's IPO in December **2020** generated gross proceeds of **$217.4 million**[338](index=338&type=chunk) - As of March 31, **2021**, the company has **not used any of the proceeds** from its IPO, and the **planned use of proceeds remains unchanged** from what was described in the final prospectus[338](index=338&type=chunk) [Defaults Upon Senior Securities](index=71&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports **no defaults** upon senior securities - **None**[339](index=339&type=chunk) [Mine Safety Disclosures](index=71&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) **Not applicable** to the company - **Not applicable**[339](index=339&type=chunk) [Other Information](index=71&type=section&id=Item%205.%20Other%20Information) The company reports **no other information** for this item - **None**[339](index=339&type=chunk) [Exhibits](index=72&type=section&id=Item%206.%20Exhibits) Exhibits include a **Transition Agreement** with Carolyn Anderson Short and **CEO and CFO certifications** - Exhibits filed include **CEO and CFO certifications** required by the **Sarbanes-Oxley Act of 2002**[342](index=342&type=chunk) - A **Transition Agreement** dated March 23, **2021**, between the company and Carolyn Anderson Short is included as an exhibit[342](index=342&type=chunk)

PART I [Business](index=4&type=section&id=Item%201.%20Business) BioAtla develops Conditionally Active Biologics (CABs) for solid tumors, with lead ADCs BA3011 and BA3021 in Phase 2 trials, leveraging acidic tumor microenvironments to reduce toxicity [Overview](index=4&type=section&id=Overview) BioAtla develops CABs for solid tumors, utilizing the acidic tumor microenvironment for selective binding to reduce toxicity, with lead candidates BA3011 and BA3021 in Phase 2 trials - The company develops highly specific and selective antibody-based therapeutics (CABs) that target the acidic tumor microenvironment to treat solid tumors, aiming to reduce toxicity in healthy tissue[11](index=11&type=chunk) - BioAtla has initiated potentially registration-enabling Phase 2 trials for its two most advanced antibody-drug conjugate (ADC) product candidates, BA3011 (targeting AXL) and BA3021 (targeting ROR2), across multiple cancer indications including sarcoma, NSCLC, and melanoma[12](index=12&type=chunk) - The company is collaborating with BeiGene to initiate Phase 1 trials in 2021 for its immuno-oncology antibody, BA3071 (targeting CTLA-4), which is designed to overcome the toxicity limitations of existing anti-CTLA-4 therapies[13](index=13&type=chunk) [Our Pipeline](index=6&type=section&id=Our%20pipeline) BioAtla's pipeline features CAB ADCs BA3011 (AXL) and BA3021 (ROR2) in Phase 2, CAB antibody BA3071 (CTLA-4) in Phase 1, and preclinical bispecifics, with plans for multiple IND submissions by 2022 BioAtla Product Pipeline Summary | Product Candidate | Target | Modality | Development Stage | Indications | | :--- | :--- | :--- | :--- | :--- | | **BA3011** | AXL | CAB ADC | Phase 2 | Soft Tissue & Bone Sarcoma, NSCLC, Ovarian Cancer | | **BA3021** | ROR2 | CAB ADC | Phase 2 | NSCLC, Melanoma, Ovarian Cancer | | **BA3071** | CTLA-4 | CAB Antibody | Phase 1 (planned 2021) | Multiple Solid Tumors | | **BA3182** | EpCAM x CD3 | CAB Bispecific | IND-Enabling | Solid Tumors | | **BA3142** | B7-H3 x CD3 | CAB Bispecific | IND-Enabling | Solid Tumors | | **Multiple Candidates** | EGFR x CD3, Nectin-4 x CD3 | CAB Bispecific | Preclinical / Discovery | Solid Tumors | - The company has developed a quantitative biomarker assay, the AXL Tumor membrane Percent Score (TmPS), to identify patients most likely to respond to BA3011, based on the level of AXL expression on the tumor membrane[19](index=19&type=chunk) - BioAtla has advanced two CAB bispecific antibody candidates, BA3182 (EpCAM x CD3) and BA3142 (B7-H3 x CD3), into IND-enabling studies in the second half of 2020, with a goal to submit up to four US INDs in 2022 for its bispecific or ADC molecules[33](index=33&type=chunk)[147](index=147&type=chunk) [Our Strategy](index=9&type=section&id=Our%20strategy) BioAtla's strategy involves advancing lead CAB candidates BA3011 and BA3021 to commercialization, expanding its pipeline with bispecifics, strengthening IP, and forming strategic collaborations to maximize platform value - Advance lead candidates BA3011 and BA3021 through potentially registration-enabling Phase 2 trials and toward commercialization, using quantitative biomarker assays (TmPS) to select patients[34](index=34&type=chunk) - Leverage the CAB technology to develop a broad pipeline of new molecules, including bispecific T cell engagers and immuno-oncology antibodies[34](index=34&type=chunk) - Maintain and strengthen its intellectual property portfolio, which as of December 31, 2020, included **492 patents and patent applications**[34](index=34&type=chunk) - Selectively enter into strategic collaborations for specific geographic regions, indications, or combinations to maximize the value of its platform, similar to the existing collaboration for BA3071[35](index=35&type=chunk) [Our Technology](index=10&type=section&id=Our%20technology) BioAtla's CAB technology exploits the acidic tumor microenvironment (Warburg Effect) for pH-dependent, reversible binding, aiming to reduce on-target, off-tumor toxicity and improve pharmacokinetics compared to traditional antibodies - The company's CAB technology leverages the low pH (acidic) conditions of the tumor microenvironment, caused by the Warburg Effect, where cancer cells preferentially use glycolysis for energy, producing lactic acid[41](index=41&type=chunk)[46](index=46&type=chunk) - CAB antibodies are designed to be active and bind to targets in the acidic TME (pH as low as **5.8**) but are reversibly inactivated in the normal physiological environment (pH **7.4**), aiming to reduce systemic toxicity[51](index=51&type=chunk)[52](index=52&type=chunk)[54](index=54&type=chunk) - Potential advantages of the CAB platform over traditional antibodies include a wider therapeutic window, reduced on-target off-tumor toxicity, increased drug exposure to tumors, and improved pharmacokinetics by avoiding target-mediated drug disposition (TMDD)[57](index=57&type=chunk) - In a preclinical non-human primate study, a CAB ADC targeting AXL showed minimal liver toxicity (ALT increase) compared to a sharp increase observed with a traditional AXL ADC, supporting the technology's potential to reduce toxicity[58](index=58&type=chunk) [Clinical Trials](index=15&type=section&id=Clinical%20trials) BioAtla's lead CAB ADCs, BA3011 and BA3021, are in Phase 2 trials, showing partial responses and biomarker correlation, while BA3071 (CTLA-4) is planned for Phase 1, and bispecifics are in IND-enabling studies with reduced systemic toxicity [BA3011 (AXL-Targeting CAB-ADC)](index=15&type=section&id=BA3011) BA3011's Phase 1 trial showed **five partial responses** in 55 patients, particularly with high AXL expression, establishing a 1.8 mg/kg dose, with Phase 2 trials initiated for sarcoma and NSCLC - In the Phase 1 trial, **five patients** achieved a confirmed partial response (PR): **four with sarcomas** and **one with NSCLC**. Antitumor activity showed a correlation with high tumor membrane expression of AXL (TmPS ≥ **70%**)[65](index=65&type=chunk)[67](index=67&type=chunk) - BA3011 was generally well-tolerated, with manageable toxicities consistent with other MMAE-based ADCs. Notably, no adverse events appeared related to on-target injury of normal, AXL-expressing tissues[80](index=80&type=chunk)[81](index=81&type=chunk) - The estimated half-life of BA3011 was approximately **four days**, twice that of a non-CAB AXL ADC (enapotamab vedotin), suggesting decreased target-mediated drug disposition (TMDD)[80](index=80&type=chunk)[87](index=87&type=chunk) - Potentially registration-enabling Phase 2 trials have been initiated for BA3011 in soft-tissue/bone sarcoma (AXL TmPS ≥ **70%**) and in NSCLC (AXL TmPS ≥ **50%**)[92](index=92&type=chunk)[94](index=94&type=chunk)[99](index=99&type=chunk) [BA3021 (ROR2-Targeting CAB-ADC)](index=25&type=section&id=BA3021) BA3021's Phase 1 trial in 59 patients yielded **four partial responses** across NSCLC, melanoma, and head and neck cancer, correlating with ROR2 expression, with Phase 2 trials initiated for melanoma and NSCLC - The Phase 1 trial of BA3021 resulted in **four partial responses**: **two in NSCLC**, **one in metastatic melanoma** (approx. **80% tumor reduction**), and **one in advanced head and neck cancer**[107](index=107&type=chunk)[110](index=110&type=chunk)[114](index=114&type=chunk) - Similar to BA3011, antitumor response in NSCLC patients was associated with high tumor membrane expression of the target, ROR2 (TmPS of at least **70%**)[109](index=109&type=chunk) - BA3021 was generally well-tolerated, with no adverse events appearing to be related to on-target injury of normal, ROR2-expressing tissues. Reported toxicities were consistent with off-target effects of free MMAE[115](index=115&type=chunk)[116](index=116&type=chunk) - A potentially registration-enabling Phase 2 trial has been initiated for BA3021 in melanoma and NSCLC patients who have progressed on prior PD-1/L1 inhibitors and have a ROR2 TmPS of **50%** or more[119](index=119&type=chunk)[122](index=122&type=chunk) [BA3071 (CTLA-4 Targeting CAB Antibody)](index=31&type=section&id=BA3071) BA3071, a CAB anti-CTLA-4 antibody, showed comparable antitumor efficacy to ipilimumab in preclinical models with reduced systemic T cell activation and fewer GI adverse events, with a Phase 1 trial planned for 2021 - In a mouse model, BA3071 demonstrated potent antitumor activity equivalent to an ipilimumab analog, including **two complete responses**[127](index=127&type=chunk)[128](index=128&type=chunk) - Unlike the ipilimumab analog, BA3071 did not lead to systemic stimulation of T cells in peripheral blood in mice, suggesting tumor-restricted activity that may lead to fewer systemic toxicities[130](index=130&type=chunk)[131](index=131&type=chunk) - In a non-human primate toxicity study, the combination of BA3071 and nivolumab was associated with only a **single gastrointestinal adverse event**, compared to **33 events** for the ipilimumab and nivolumab combination[131](index=131&type=chunk)[133](index=133&type=chunk) - The company plans to work with its partner BeiGene to initiate a Phase 1 dose-escalation trial of BA3071 in advanced solid tumor patients in 2021, both as a monotherapy and in combination with tislelizumab (an anti-PD-1 antibody)[135](index=135&type=chunk) [Bispecific Candidates](index=33&type=section&id=Bispecific%20candidates) BioAtla is developing CAB bispecific T-cell engagers for tumor-restricted activation, with preclinical data showing potent antitumor activity and reduced systemic toxicity, advancing BA3182 and BA3142 into IND-enabling studies - The company's EpCAM x CD3 bispecific antibody with a CAB CD3 binding domain showed potent antitumor activity in a mouse xenograft model, comparable to a conventional bispecific[136](index=136&type=chunk)[137](index=137&type=chunk)[139](index=139&type=chunk) - In non-human primates, the EpCAM x CAB CD3 bispecific led to much lower levels of systemic IL-6, an inflammatory cytokine, and significantly better safety (**no deaths**) compared to a conventional EpCAM x CD3 bispecific, which caused severe toxicities and death at the same dose levels[140](index=140&type=chunk)[142](index=142&type=chunk) - Two CAB bispecific antibody candidates, BA3182 (EpCAM x CD3) and BA3142 (B7-H3 x CD3), were advanced into IND-enabling studies in the second half of 2020[147](index=147&type=chunk) [Competition](index=36&type=section&id=Competition) BioAtla faces intense competition in the biopharmaceutical industry, particularly in the ADC space with **10 approved** and **60 in clinical development** as of February 2020, from entities with significantly greater resources - The company faces substantial competition from a wide variety of institutions, including large biopharmaceutical companies and specialty biotechnology companies with greater financial and development resources[149](index=149&type=chunk)[152](index=152&type=chunk) - As of February 2020, there were **10 approved ADCs** and approximately **60 ADCs in clinical development**, representing a key area of competition for BA3011 and BA3021[150](index=150&type=chunk) - The company faces direct competition on specific targets, such as from NBE-Therapeutics AG, which is also developing therapies for ROR2, the target of BA3021[150](index=150&type=chunk) [Manufacturing](index=37&type=section&id=Manufacturing) BioAtla relies entirely on third-party CMOs for all manufacturing, from preclinical to potential commercial stages, to maintain an efficient infrastructure and focus on core development - The company does not own or operate manufacturing facilities and relies on third-party contract manufacturing organizations (CMOs) for all production of its product candidates for preclinical and clinical trials[156](index=156&type=chunk) - This outsourcing strategy is intended to maintain an efficient infrastructure, eliminating the need for investment in internal manufacturing facilities and allowing focus on product development[156](index=156&type=chunk) [Collaborations](index=37&type=section&id=Collaborations) BioAtla strategically collaborates, notably with BeiGene for BA3071, receiving a **$20 million** upfront payment and potential milestones/royalties, while also out-licensing technology for specific fields and territories - Entered a global collaboration with BeiGene for BA3071, receiving a **$20 million** upfront payment and **$5 million** for manufacturing costs. BeiGene is responsible for all global development, manufacturing, and commercialization costs[158](index=158&type=chunk)[160](index=160&type=chunk) - Under the BeiGene agreement, BioAtla is eligible for up to **$225.5 million** in development, regulatory, and commercial milestones, plus tiered royalties ranging from high-single digits to low twenties on worldwide sales[160](index=160&type=chunk) - The company has out-licensed its technology for specific fields or territories through exclusive agreements with Inversagen (aging-related diseases), Himalaya Therapeutics (Greater China), BioAtla Holdings (CAR-T), and EXUMA Biotech (specific CAR-T targets)[162](index=162&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[168](index=168&type=chunk) [Intellectual Property](index=40&type=section&id=Intellectual%20property) BioAtla's IP portfolio, comprising **492 patents and applications** as of December 31, 2020, protects its CAB technology and product candidates, with key composition of matter patents expiring no earlier than 2037-2039 - As of December 31, 2020, the company's intellectual property portfolio includes **492 patents and patent applications**, comprising **257 issued patents**, **9 allowed applications**, and **226 pending applications**[172](index=172&type=chunk) - Composition of matter claims for BA3011 and BA3021, if issued, would not expire before **2037**. For BA3071, they would not expire before **2039**[184](index=184&type=chunk)[185](index=185&type=chunk) - The company holds **14 issued U.S. patents** covering various aspects of the manufacturing methods used to generate CAB antibodies, with patent terms expiring from **2030 to 2036**[186](index=186&type=chunk) [Government Regulation and Product Approval](index=44&type=section&id=Government%20regulation%20and%20product%20approval) BioAtla's biologics face extensive FDA and international regulation, requiring preclinical, IND, and multi-phase clinical trials for BLA approval, with potential for expedited programs and ongoing post-market compliance - Biologic products are regulated in the U.S. by the FDA under the FDCA and PHSA, requiring approval of a Biologics License Application (BLA) before marketing[191](index=191&type=chunk) - The development process involves extensive preclinical testing (GLP), submission of an IND, and three sequential phases of clinical trials (GCP) to establish safety and efficacy[192](index=192&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) - The FDA offers expedited programs such as Fast Track, Breakthrough Therapy, Priority Review, and Accelerated Approval for drugs that address serious conditions and unmet medical needs[213](index=213&type=chunk)[214](index=214&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - In the European Union, marketing authorization requires submitting an MAA to the EMA via a centralized procedure for biologics, which involves a **210-day** evaluation period by the CHMP[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - If a companion diagnostic is essential for the safe and effective use of a product, the FDA generally requires simultaneous approval of the diagnostic with the therapeutic product[230](index=230&type=chunk) [Human Capital Management](index=60&type=section&id=Human%20Capital%20Management) As of December 31, 2020, BioAtla had **36 employees** and **18 contractors** in China, with a compensation program focused on attracting talent through salary, bonuses, and equity, while promoting diversity and development - As of December 31, 2020, the company had **36 employees** and **18 independent contractors in China**. None of the employees are subject to a collective bargaining agreement[282](index=282&type=chunk) - Compensation includes base salary, annual incentive bonuses, and long-term equity awards to align employee and stockholder interests[284](index=284&type=chunk) - The company promotes diversity and inclusion, focusing on providing a safe work environment, equal employment opportunity, and learning and development opportunities[285](index=285&type=chunk) [Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) BioAtla faces significant risks including historical losses, need for capital, reliance on its CAB platform and clinical success, intense competition, regulatory hurdles, third-party dependencies, IP challenges, and COVID-19 impacts - The company has a history of significant losses (**$35.9 million in 2020**) and expects to continue incurring them, requiring substantial additional capital to finance operations[291](index=291&type=chunk)[293](index=293&type=chunk)[296](index=296&type=chunk) - Success is substantially dependent on the proprietary CAB technology platform; any failure or adverse event related to the platform could have a detrimental impact on all product candidates[291](index=291&type=chunk)[306](index=306&type=chunk) - The company faces risks of clinical trial delays or failures, and positive early-stage results may not be predictive of late-stage outcomes. The FDA has not opined on whether the current Phase 2 trials will be sufficient for approval[291](index=291&type=chunk)[303](index=303&type=chunk)[318](index=318&type=chunk) - Reliance on third parties for collaborations (e.g., BeiGene), clinical trial conduct, and manufacturing presents risks related to performance, supply chain disruptions, and regulatory compliance[445](index=445&type=chunk)[454](index=454&type=chunk)[456](index=456&type=chunk) - The COVID-19 pandemic poses a risk of significant disruption to preclinical studies and clinical trials, which could delay or prevent regulatory approvals[292](index=292&type=chunk)[441](index=441&type=chunk) [Unresolved Staff Comments](index=119&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - The company states that this item is not applicable[557](index=557&type=chunk) [Properties](index=120&type=section&id=Item%202.%20Properties) BioAtla leases its **43,377 square feet** headquarters in San Diego, California, with the current lease terminating on February 28, 2025 - The company leases approximately **43,377 square feet** of office and laboratory space for its headquarters in San Diego, California[558](index=558&type=chunk) - The current lease for its headquarters terminates on **February 28, 2025**[558](index=558&type=chunk) [Legal Proceedings](index=120&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings deemed to have a material adverse effect on its business or financial condition - The company is not currently a party to any material legal proceedings[559](index=559&type=chunk) [Mine Safety Disclosures](index=120&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports this item as not applicable due to the absence of mining operations - The company states that this item is not applicable[560](index=560&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=119&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BioAtla's common stock (BCAB) began trading on Nasdaq on December 16, 2020; the company has never paid dividends and completed a **$72.5 million** Series D preferred stock sale and a **$217.4 million** IPO in 2020 - The company's common stock began trading on the Nasdaq Global Market under the symbol **"BCAB"** on **December 16, 2020**[561](index=561&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future, intending to retain earnings for business growth[563](index=563&type=chunk) - On July 13, 2020, the company sold approximately **140.6 million shares** of Series D preferred stock for aggregate proceeds of **$72.5 million** in an unregistered transaction[565](index=565&type=chunk) - The IPO on December 15, 2020, involved the sale of **12,075,000 shares** at **$18.00 per share**, generating gross proceeds of **$217.4 million**[569](index=569&type=chunk) [Selected Financial Data](index=120&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable as it is a smaller reporting company[571](index=571&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=121&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) BioAtla reported a **$35.9 million** net loss in 2020, driven by decreased collaboration revenue and increased G&A, partially offset by reduced R&D, with **$238.6 million** cash expected to fund operations through 2022 [Results of Operations](index=126&type=section&id=Results%20of%20operations) BioAtla's net loss increased to **$35.9 million** in 2020, primarily due to a **$4.8 million** decrease in collaboration revenue and a **$3.0 million** rise in G&A expenses, partially offset by a **$6.0 million** R&D reduction Comparison of Operations (Years Ended Dec 31) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $429 | $5,200 | $(4,771) | | Research & Development | $19,933 | $25,919 | $(5,986) | | General & Administrative | $10,595 | $7,549 | $3,046 | | Loss from Operations | $(30,099) | $(28,268) | $(1,831) | | Net Loss | $(35,853) | $(29,855) | $(5,998) | - Collaboration revenue decreased primarily due to the amendment of the BeiGene collaboration and the transfer of development obligations to BeiGene. The remaining **$19.8 million** of deferred revenue is expected to be earned upon transfer of know-how and materials[601](index=601&type=chunk) - The decrease in R&D expenses was mainly driven by a **$6.8 million** reduction in external costs as manufacturing activities and Phase 1 trials for BA3011 and BA3021 were nearing completion in late 2019[604](index=604&type=chunk) - The increase in G&A expenses was primarily due to a **$2.3 million** increase in stock-based compensation related to the IPO and a **$0.8 million** increase in personnel expenses[605](index=605&type=chunk) [Liquidity and Capital Resources](index=128&type=section&id=Liquidity%20and%20capital%20resources) BioAtla's cash and cash equivalents surged to **$238.6 million** by December 31, 2020, primarily from **$271.8 million** in financing activities, including IPO and Series D proceeds, expected to fund operations through 2022 - As of December 31, 2020, the company had cash and cash equivalents of **$238.6 million**[612](index=612&type=chunk) Cash Flow Summary (Years Ended Dec 31) | Cash Flow Activity | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Operating Activities | $(36,334) | $(9,645) | | Investing Activities | $(590) | $(1,509) | | Financing Activities | $271,825 | $3,995 | - Net cash from financing activities in 2020 included **$200.2 million** from the IPO and **$68.2 million** from the Series D convertible preferred stock issuance[626](index=626&type=chunk)[627](index=627&type=chunk) - The company believes its current cash and cash equivalents are sufficient to fund ongoing operations at least through the end of **2022**[618](index=618&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=135&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable as it is a smaller reporting company[649](index=649&type=chunk) [Financial Statements and Supplementary Data](index=136&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited financial statements show **$238.6 million** cash and **$210.0 million** equity as of December 31, 2020, with a **$35.9 million** net loss for 2020, reflecting IPO, Series D financing, and corporate reorganization Consolidated Balance Sheet Highlights (as of Dec 31, 2020) | Metric | Amount (in thousands) | | :--- | :--- | | Cash and cash equivalents | $238,605 | | Total Assets | $244,937 | | Total Liabilities | $34,963 | | Total Stockholders' Equity | $209,974 | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2020) | Metric | Amount (in thousands) | | :--- | :--- | | Collaboration Revenue | $429 | | Total Operating Expenses | $30,528 | | Net Loss | $(35,853) | - In July 2020, the company completed a corporate reorganization, converting from an LLC to a Delaware corporation, spinning off Himalaya Therapeutics SEZC, and completing a Series D financing[676](index=676&type=chunk) - In December 2020, the company completed its IPO, selling **12,075,000 shares** of common stock for net proceeds of **$198.3 million**. All outstanding convertible preferred stock was converted into common and Class B common stock[768](index=768&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=174&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None reported[866](index=866&type=chunk) [Controls and Procedures](index=174&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of December 31, 2020; a management report on internal control over financial reporting is not yet required for this newly public company - Management concluded that as of **December 31, 2020**, the company's disclosure controls and procedures were effective at the reasonable assurance level[867](index=867&type=chunk) - A management report on internal control over financial reporting is not included, as permitted for newly public companies[868](index=868&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended **December 31, 2020**[869](index=869&type=chunk) [Other Information](index=174&type=section&id=Item%209B.%20Other%20Information) Co-founder Carolyn Anderson Short will depart effective May 31, 2021, receiving severance benefits including **18 months** of base salary and accelerated equity vesting - On **March 18, 2021**, co-founder and Chief of Intellectual Property & Strategy, Carolyn Anderson Short, agreed to depart the company effective **May 31, 2021**[870](index=870&type=chunk) - Ms. Short's transition agreement includes severance benefits such as a lump sum payment equal to **18 months** of base salary and accelerated full vesting of her time-vesting equity awards[871](index=871&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=175&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[872](index=872&type=chunk) [Executive Compensation](index=175&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874](index=874&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=175&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for beneficial owners and management is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874](index=874&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=175&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874](index=874&type=chunk) [Principal Accountant Fees and Services](index=175&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874](index=874&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=176&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements and an index of exhibits filed with the Annual Report, noting the omission of inapplicable financial statement schedules - This item lists the financial statements and an index of all exhibits filed with the Form 10-K[875](index=875&type=chunk)[876](index=876&type=chunk) [Form 10-K Summary](index=176&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports that no Form 10-K summary is provided - None[877](index=877&type=chunk)